Why leadership is needed from dealer groups and financial advisers

Financial planners should take advantage of uncertain times and show leadership, writes Todd Kardas.

Financial advice businesses are under increased scrutiny in these interesting times, and dealer groups are providing guidance and leadership to their advisers while considering both the threats and the opportunities.

Let’s take the global financial crisis. While markets plummeted and investment flows dried in some instances, the increased sense of market instability provided a great opportunity for financial advice businesses to focus on life risk advice.

For some advisers and dealer groups there was no need to change much at all — especially for those with an insurance background.

For others, including those with experience in financial planning and investment, it will be even harder to leverage this opportunity.

The challenges faced by dealer groups wishing to pursue an increase in risk insurance advice may include a lack of internal capability in key areas such as risk sales training, technical support, marketing, product education and client engagement strategies.

This is where some of the biggest changes have occurred in life office support over the past five years.

Some life offices have been buying up distribution, while others have been developing their partnering capability.

In a competitive marketplace, where product and pricing differentiation is harder to measure and becoming a shrinking component of the overall value proposition, dealer group and adviser support services are being used by life offices to differentiate their offerings.

Many readers will recall that before Financial Services Reform (FSR), most of the well-established life insurers provided advisers and brokers with sales training and technical support.

At a recent conference, the chief executive of a large national dealer group commented that he thought the pendulum had swung too far towards technical/ compliance style training since the transition to FSR.

He also said that the recent ‘sales style’ of training being offered by some insurers would do more to close the underinsurance gap than simply rolling out more product training or teaching technical skills.

Another critical area where some of the larger, more resourced insurers are providing financial advice businesses with support is mobile underwriting.

Mobile underwriters can enable advisers to increase their productivity through accessing the skills of a senior underwriter in the adviser’s own office.

With insurance solutions becoming more complex, mobile underwriters are becoming an important link between advisers and the completion of applications.

Dealer groups and their advisers are now entering into partnerships with life insurance offices more than ever to leverage an insurer’s in-house capabilities.

This has been seen throughout the past few years with dealer groups reducing or modifying their approved product lists (APLs) via a competitive tender process.

High on the list of priorities for many dealer groups undertaking this exercise has been the capability of the selected life offices to support advisers beyond just providing competitive product features and standard operational functions.

Some dealer groups and life offices even go so far as to put in place contracts that stipulate what support will be provided from the life offices to the dealer group’s advisers, and when that will happen.

Managing these programs has now become a core competency within financial advice businesses and life offices, and the evidence suggests that the more proficient a life office is in supporting growth initiatives with their partner dealer groups, the greater share of wallet they receive from the advisers within those dealer groups.

It has been commonplace for many years for life insurance distribution and sales teams to segment advisers and tailor service offerings to suit.

With the recent trend towards dealer groups and life offices partnering to provide enhanced service for advisers, life offices are now looking at dealer groups through a similar lens.

There are a number of benefits for dealer groups in this process of segmenting and customising offerings.

Firstly, the existing capability of the dealer group is assessed, and only those services that do not currently exist are offered and promoted to the advisers.

Some life offices are offering dealer groups technical hotlines.

These hotlines assist advisers seeking real-time technical support while dealing with their clients. Most dealer groups do not have the resources or capacity to have a full-time life risk technical hotline.

Client engagement strategies and the other so-called ‘soft skills’ (previously called sales skills) are other emerging areas where dealer groups are partnering with life offices to up-skill advisers.

Life offices operating a full-time risk sales training academy are reporting an increase in new advisers using their products and services, as well as greater adviser loyalty.

Strength in partnership is one way that dealer groups can continue to provide leadership to their advisers in uncertain times.

Todd Kardas is head of adviser distribution at CommInsure.